Oil rises on Goldman forecast, signs producers complying with cuts

Fri Dec 16, 2016 3:26pm EST
 
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By Scott DiSavino

NEW YORK (Reuters) - Oil rose on Friday, edging closer to new 17-month highs, after Goldman Sachs boosted its price forecast for 2017 and producers showed signs of adhering to a global deal to reduce output.

Brent futures rose $1.19, or 2.2 percent, to settle at $55.21 a barrel, while U.S. West Texas Intermediate crude rose $1, or 2 percent, to settle at $51.90 per barrel.

That put both contracts on track to rise for a fourth week in the last five, with Brent up around 23 percent during that time and U.S. crude up about 20 percent.

The premium of the Brent front-month over the same U.S. contract closed at $2.26 a barrel, its highest since the end of August.

"We're up today because Goldman Sachs bumped up its oil estimates and the Russians said their oil companies would reduce output," said Phil Davis, managing partner of venture capital fund PSW Investments in Woodland Park, New Jersey.

The Organization of the Petroleum Exporting Countries agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1, its first such deal since 2008. Russia and other non-OPEC producers plan to cut about half as much.

Those deals, clinched over the past two weeks, have boosted expectations that a two-year supply overhang will clear soon and prices remain near highs last seen in July 2015.

Russia said on Friday that all of the country's oil companies, including top producer Rosneft, had agreed to reduce output.   Continued...

 
A fuel pump assistant fills cars with petrol at Budaiya Fueling Station west of Manama, Bahrain January 26, 2016. REUTERS/Hamad I Mohammed/File photo